Small Business Regulatory Issues for 2018

Regulatory issues facing small business are ever changing and never as simple to understand as the lawmakers intend them to be. Small business owners are constantly juggling different priorities and it can be an almost herculean task to keep track of proposed new regulatory changes that impact their particular industries.

Here are the top regulatory issues small business clients are facing in 2018:

#1 Tax Reform. In the last weeks of 2017, Congressional Republicans passed with unusual speed the first major tax overhaul in decades. Businesses and lawmakers are now rapidly assessing the bill’s impact, since many provisions take effect in 2018. Key points for businesses include the reduction in the corporate tax rate to 21 percent, and deduction of business income for pass-through entities of up to 20 percent (requirements for application of this deduction are complex).

#2 The Affordable Care Act (ACA). Under the Affordable Care Act (ACA), individuals must demonstrate they have qualified health insurance coverage or qualify for an exemption on their tax returns, or face a penalty from the IRS. The tax reform overhaul negates the ACA’s individual mandate penalty by reducing it to $0 by 2019. Although the tax bill does not repeal the provision, negating the penalty amount essentially has that effect.

#3 Paid Leave Laws. Over 40 different states and local jurisdictions have passed paid sick leave laws applicable to private employers. And while there are fewer paid family leave laws on the books, 2018 has brought the nation’s most comprehensive paid family leave to New York State. However, a recent proposal in Congress, the Workflex in the 21st Century Act, would pre-empt the many paid leave laws at the state and local level, as well as any others expected to be introduced.

#4 Employee Verification. The 2017 changes to the Form I-9 (the Employment Eligibility Verification Form) and supporting guidance were minor compared to previous revisions, but employers will still need to ensure use of the correct form and delivery of the separate instruction pages to all new employees on their first day of employment. While documentation audits and worksite inspections seemed to level off in 2017, Immigration and Customs Enforcement has warned that it will quadruple the number of worksite inspections in the coming year, consistent with President Trump’s pre-election platform and post-election agenda regarding immigration reform.

# 5 Overtime regulations. Employers should continue to comply with the existing federal overtime regulations, as well as applicable state requirements that may incorporate salary levels exceeding the federal level. We could see new federal overtime regulations by early 2019.

# 6 Pay equity. Pay discrimination based on gender also concerns states looking to aggressively address recognized and documented gender pay gaps and ensure pay equity in the workplace. In 2018, states and even some local jurisdictions will likely push through proposals to ban or limit the collection and use of salary information and benefits history in the hiring process.

States’ attorneys general and federal regulatory agencies, such as the Federal Trade Commission and the Consumer Financial Protection Board, investigate and penalize businesses for data security failures leading to data breaches. Recent comprehensive cybersecurity rules enacted by state agencies in New York and Colorado may prompt other states to regulate and enforce data security standards in the financial services and insurance industries. And with the rise of biometric technology in the private sector, privacy laws regulating the collection and use of biometric data, such as those in Illinois, Texas, and Washington, may become nationwide industry standards.

#8 State and municipal retirement plans. Because a large percentage of private-sector workers aren’t saving enough for retirement, combined with the forecasted shortcomings of the Social Security program, many states are considering developing state-sponsored retirement savings plans. To date, nine have enacted laws allowing program development.

#9 Payment evolution. In September 2017, the second phase of same-day automated clearinghouse (ACH), permitting debits up to $25,000, became a payment option for businesses, giving cash flow management a boost. Faster payment options will continue to expand and become more available to small businesses in 2018.

Starting in March 2018, financial institutions will be required to meet a strict 5 p.m. local deadline for same-day ACH funds availability. The gig economy — temporary, flexible jobs performed by freelancers — is pushing faster payment modalities. 2018 may see near real-time payment solutions, along with more convenient options for paying out tips to employees. Small businesses should work closely with their financial institutions, payment processors, and vendors to identify opportunities to improve payment speed.

These are just a few of the hot regulatory issues that are top-of-mind for small business owners today, and you’ve undoubtedly been hearing from your small business clients already with questions and clarifications galore. With a knowledge of these and other business regulations, you can help your small business clients understand their role in remaining compliant and avoiding costly penalties, which in turn will help their business grow.